In a significant move towards launching a spot Bitcoin exchange-traded fund (ETF), Grayscale executives, including CEO Michael Sonnenshein and legal chief Craig Salm, engaged in detailed discussions with the Securities and Exchange Commission (SEC) on November 20. The meeting, which also included representatives from Davis Polk law firm, focused on the proposed rule change for listing the Grayscale Bitcoin Trust (GBTC) on the NYSE Arca.

Grayscale meets SEC

According to a memo from the SEC, the discussions centered around NYSE Arca’s Rule 8.201-E, under which Grayscale intends to list its flagship Bitcoin trust. This follows Grayscale’s recent partnership with BNY Mellon, which will act as the transfer agency and service agent for GBTC, a step seen as vital for the ETF conversion process.

Bloomberg ETF analyst James Seyffart noted that the SEC’s division of trading and markets, responsible for approving or denying form 19b-4 submissions, is pivotal in this process. Seyffart also observed that Grayscale’s agreement with BNY Mellon is a necessary move for the trust’s conversion into an ETF, though not a direct indicator of imminent approval.

ETF Store President Nate Geraci, commenting on the developments, highlighted the significance of Grayscale’s potential “uplisting” of GBTC to NYSE Arca. Geraci believes that this could give Grayscale a competitive edge in the ETF market, especially if it coincides with other issuers launching spot BTC ETFs and if Grayscale competes effectively on fees.

In October, Grayscale showed its commitment to this transition by submitting an S-3 form registration statement with the SEC, signaling its intention to list GBTC shares on the NYSE Arca. This followed a U.S. appellate court mandate directing the SEC to revisit its decision on Grayscale’s spot ETF conversion bid.

In a X post on November 22, Nate Geraci, President of ETF Store, shared his view that the most significant outcome of Grayscale’s recent meeting with the SEC is the characterization of the GBTC conversion as an ‘uplisting’.

 

The recent meetings between Grayscale and the SEC are part of a broader industry movement, with major asset managers like BlackRock and Fidelity also seeking approval for spot Bitcoin ETFs. Seyffart remains optimistic, maintaining a 90% probability of a spot Bitcoin ETF approval before January 10, 2024.

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This latest engagement with the SEC underlines Grayscale’s continued efforts and the growing industry anticipation for the introduction of a spot Bitcoin ETF, a development that could significantly impact the crypto asset management landscape.